We actually got to play with the iPhone-controlled Parrot AR.Drone quadricopter back at Macworld a little while ago, but we didn't get a chance to see the "AR" part of it (augmented reality, of course) until GDC last week. Parrot pulled out the AR targets for us, and while the games they had running were very rudimentary, we did get a good feel for the action.
The verdict? It works, but it's not that fun yet. Sure enough, when the Drone's cameras picked up the weird pattern of black and white dots and/or the striped tube that the company attached to the top of a second Drone, the iPhone displayed a lock-on target or the weird robot that you can see above (that's the iPhone's video running out to a television, something that's technically a no-no under the current SDK). And when the drone moved around it, the display faithfully showed the 3D model -- it didn't look actually real, but you could fly around and interact with it. And after you blasted it with enough missiles, it exploded.